The disclosure of a large investment in Sears, Roebuck and Co. by a real estate trust known for liquidating retail assets sparked a 23 percent gain in Sears' stock on Friday.

Vornado Realty Trust, which owns the Merchandise Mart, shopping malls and commercial properties across the country, disclosed in a filing that it has bought a 4.3 percent stake in Sears, fueling speculation that the troubled department store chain might be in for big changes.

The REIT did not spell out its intentions, but people familiar with past deals by Vornado Chairman Steven Roth say this is not a passive investment.

"The important thing to know about Steve Roth is that he's made a lot of money for himself and his investors by investing in failed retailers," said John Lutzius, principal in Green Street Advisors Inc.

That reputation prompted the sharp rise in Sears' stock Friday. The shares closed at $45.88, up 23 percent. It's the biggest one-day gain in Sears' stock since at least 1980, according to Bloomberg News.

And the shares still may have some upside. In July, Deutsche Bank estimated that Sears' stock could be worth as much as $67 a share based on the value of its real estate, fixtures, furnishings and equipment.

"Vornado does not take positions like this for investment purposes," Deutsche Bank said in a report Friday.

Lampert has driven Kmart's stock sharply higher this year by selling 68 of the ailing retailer's stores for nearly $847 million. Sears purchased 50 of those properties.

Kmart shares closed Friday at $95.03, about $3 shy of its 52-week high and more than four times the price of its 52-week low of $22.41.

Lampert's ESL Investments owns about half of Kmart and about 15 percent of Sears' stock.

One former Sears executive believes Vornado is betting on Lampert. "I got a call from an investor group last week that was thinking of buying some Sears stock for the same reason," he said.

Vornado bought 1.2 million Sears shares for $40.6 million, or an average price of $34.44, according to a filing. The company acquired an "economic interest" in another 7.9 million shares.

Before Friday's stock run-up, Vornado's stake had a market value of about $348 million.

Retailers on ropes targeted

Roth has an affinity for ailing retailers, and Sears' sales have slumped for four straight years.

In 1995, Vornado paid nearly $55 million for a 27 percent stake in Alexander's Inc., a struggling East Coast department store chain.

That purchase, when combined with an existing 2.3 percent stake and another stake owned by a private Roth company, gave him control over Alexander's, which was shut down. The department store's properties were then redeveloped and are an important part of Vornado's holdings.

The template for the Alexander's deal was made in 1980, when Roth gained control of Vornado, then the publicly held parent of Two Guys, a failing discount retail chain. He eventually closed the stores but continued the company as a real estate firm and converted it into a REIT in 1993.

More recently, Vornado launched a failed bid for Mervyn's. Mervyn's, with 266 stores and nearly 21.6 million square feet, is less than one-seventh the size of Sears. Roth also is rumored to be interested in Toys "R" Us Inc.

In a way, Sears doesn't fit the pattern.

"We can only speculate on why Vornado has decided to buy equity in a company that is not distressed and whose debt is investment grade," Merrill Lynch's Daniel Barry said in a report. "It's possible Vornado has reason to believe that Sears plans to sell some real estate."

Deutsche Bank real estate analyst Louis Taylor doubts that Vornado is after control of Sears. "Vornado shareholders aren't owning Vornado shares with the expectation that the company will buy Sears," he said.

"My guess is that they'll assist Sears to maximize the value of some locations," he said. "What if Sears wants to sell 50 locations? Which should they be, and what should they expect for a price?"

Pruning possible

Sears has wanted to improve results at its 300 smaller stores. Options include moving some, closing others or converting them to a new format.

His two-room apartment in a run-down township is a far cry from Chand Pandita's hometown of Anantnag, 150 miles away, in the disputed territory of Kashmir, where pristine agricultural fields spread to the horizon.